\[HOW-TO\] Reason correctly about the price of crypto-currency
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So, you discovered Bitcoin, and with it Litecoin and Feathercoin. You were so excited you ran out and bought a bunch, and the very next day, the price went down by 50%. Now you’re panicking, wondering if you make the wrong choice, and if you should sell your position and wait for it to start going back up again.
Now for some people, the story would end there, but those who got in earlier can actually tell you how the rest of the story goes:
The price started plummeting. It didn’t just go down 50% one day, it did that every day for weeks until the price was so depressing that you couldn’t bear to open a chart. But that’s ok, because it goes up and down all the time, and you’re sure it’s going to recover any day now.
But it didn’t. It stayed there… not for weeks, but for months. So you finally decided to just get out and accept the loss. Or maybe you cut and run early, and are celebrating how much you [i]didn’t lose[/i].
And another 2 months goes by, and suddenly out of the blue, it skyrockets! So, you buy in again… And the cycle of loss repeats itself.
Here’s the problem: You’re thinking about the price wrong.
You’re looking at the chart that pops up on your screen, and your saying, “Oh look. My coins gained a bunch of value.” but in truth, something else is happening: Your dollars/pounds/yen/tulips are, for every percent gained, are in fact LOSING that much value.
Start at the beginning of the chart, and look at how much value your existing money has LOST! Now, ask yourself why. Why did my money lose all that value? A dollar used to be worth 1 Bitcoin, but now it takes $1,000 to buy the same amount. That’s called inflation, and it’s happening constantly to ALL the old currencies across the board with regards to their valuation against crypto-currencies. Look at it the other way: It used to take an entire Bitcoin to buy one dollar, but now it takes 1/1,000th of a Bitcoin. Which currency would you rather be holding?
The reason it’s lost so much value is because it lacked that value to begin with, and people are waking up to that fact. It’s a piece of paper, and a piece of paper has less inherit value than a currency which can’t be counterfeited. It has less inherit value than a currency which can be transmitted anywhere in the world instantly almost for free. It has less inherit value than a completely decentralized public ledger that’s maintained faithfully in a trust-less environment, and it definitely has less value against a currency that a government and banks can’t just print more of any time they feel like it.
So when you look at that 1 year chart, you start to realize where the scam is actually happening: It’s your dollar that’s losing it’s value, not your coins. The more you convert your dollars to crypto-currency today, the more purchasing power you’ll have next year when that inevitable trend continues. The more you spend your coins, the more you’ll foster adoption of the currency, which will drive the valuation up over time. The more you value crypto-currency as the solution to the problem of hyper-inflation and government deficit spending, the sooner you will stop making bad trades back into fiat-currency and losing value.
So the next time you see crypto-currencies take a nose dive, don’t think, “Look how much value they lost”, because that doesn’t tell the whole story. Instead, think, “Look how much value they gave back to fiat, and what that means if I buy now in terms of my future purchasing power.”
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LOL. Nicely done.
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LOL. But why on earth did you feel you have to say this?? Those who know, know. Those who don’t know, don’t want to know.
:) -
[quote name=“TheTribesman” post=“40267” timestamp=“1386275516”]
LOL. But why on earth did you feel you have to say this?? Those who know, know. Those who don’t know, don’t want to know.
:)
[/quote]
Disagree… there are always folk that need a little pushing in the right direction (I usually refer to them as ‘Daily Mail Readers’)… Nice work Kevlar. The more folk we can persuade to hold tight and play the long game the better. There would a bit less speculation and we would all gain. -
[quote name=“TheTribesman” post=“40267” timestamp=“1386275516”]
LOL. But why on earth did you feel you have to say this?? Those who know, know. Those who don’t know, don’t want to know.
:)
[/quote]We are here to help, its the feathercoin way.
Great post Kevlar
We should add this thread to the guides section in a few days time.
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Thank you Kevlar :)
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I came to Feathercoin because of being scammed and manipulated. Feathercoin was here to point another way, to the greater use of coins. That’s why I stayed to help out.
Rep +*1000
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[quote name=“Entimp” post=“40271” timestamp=“1386276420”]
[quote author=TheTribesman link=topic=5472.msg40267#msg40267 date=1386275516]
LOL. But why on earth did you feel you have to say this?? Those who know, know. Those who don’t know, don’t want to know.
:)
[/quote]
Disagree… there are always folk that need a little pushing in the right direction (I usually refer to them as ‘Daily Mail Readers’)… Nice work Kevlar. The more folk we can persuade to hold tight and play the long game the better. There would a bit less speculation and we would all gain.
[/quote]
I stand corrected, but I think the speculation is here to stay. In fact, I personally think the landscape has changed forever. Only time will tell if the principles that CC’s are based on will hold up in the future. It’ll be interesting to see where things are in 2 years. And I still don’t think the network is consumer grade yet. Nowhere near. -
[quote name=“TheTribesman” post=“40346” timestamp=“1386291363”]
I stand corrected, but I think the speculation is here to stay. In fact, I personally think the landscape has changed forever. Only time will tell if the principles that CC’s are based on will hold up in the future. It’ll be interesting to see where things are in 2 years. And I still don’t think the network is consumer grade yet. Nowhere near.
[/quote]And Linux still isn’t grandma ready. But nobody cares about that anymore.
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[quote name=“zerodrama” post=“40353” timestamp=“1386292502”]
[quote author=TheTribesman link=topic=5472.msg40346#msg40346 date=1386291363]
I stand corrected, but I think the speculation is here to stay. In fact, I personally think the landscape has changed forever. Only time will tell if the principles that CC’s are based on will hold up in the future. It’ll be interesting to see where things are in 2 years. And I still don’t think the network is consumer grade yet. Nowhere near.
[/quote]And Linux still isn’t grandma ready. But nobody cares about that anymore.
[/quote]Apparently I need to wait 24 hours to give you more rep, ZD.
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[quote name=“zerodrama” post=“40353” timestamp=“1386292502”]
[quote author=TheTribesman link=topic=5472.msg40346#msg40346 date=1386291363]
I stand corrected, but I think the speculation is here to stay. In fact, I personally think the landscape has changed forever. Only time will tell if the principles that CC’s are based on will hold up in the future. It’ll be interesting to see where things are in 2 years. And I still don’t think the network is consumer grade yet. Nowhere near.
[/quote]And Linux still isn’t grandma ready. But nobody cares about that anymore.
[/quote]
I thought the USP was instant free transfers. The reality is up to 24hr wait for confirmation, and a transaction fee. How far down the line are instant transfers. By instant, I mean being able to walk into an airport, buy a ticket, and get on the next flight? Even if the software existed today, the confirmation speeds make it impossible.Maybe no-one cares, but it’ll all have to be sorted out before we spend any of our cc’s the way we spend fiat money. Until then, it’s all about speculating and moneymaking on crypto exchanges.
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[quote name=“TheTribesman” post=“40367” timestamp=“1386296399”]
Maybe no-one cares, but it’ll all have to be sorted out before we spend any of our cc’s the way we spend fiat money. Until then, it’s all about speculating and moneymaking on crypto exchanges.
[/quote]That’s backwards. Sell ice cream first, then air plane tickets.
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[quote name=“TheTribesman” post=“40367” timestamp=“1386296399”]
[quote author=zerodrama link=topic=5472.msg40353#msg40353 date=1386292502]
[quote author=TheTribesman link=topic=5472.msg40346#msg40346 date=1386291363]
I stand corrected, but I think the speculation is here to stay. In fact, I personally think the landscape has changed forever. Only time will tell if the principles that CC’s are based on will hold up in the future. It’ll be interesting to see where things are in 2 years. And I still don’t think the network is consumer grade yet. Nowhere near.
[/quote]And Linux still isn’t grandma ready. But nobody cares about that anymore.
[/quote]
I thought the USP was instant free transfers. The reality is up to 24hr wait for confirmation, and a transaction fee. How far down the line are instant transfers. By instant, I mean being able to walk into an airport, buy a ticket, and get on the next flight? Even if the software existed today, the confirmation speeds make it impossible.Maybe no-one cares, but it’ll all have to be sorted out before we spend any of our cc’s the way we spend fiat money. Until then, it’s all about speculating and moneymaking on crypto exchanges.
[/quote]If that were true, gyft.com wouldn’t exist.
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It’s a nice way of looking at things but it is not entirely correct. Of course fiat is losing value daily, but not to the amount of 1000/1 in the time since bitcoin came into being to now. If that were the case then other commodities such as a loaf of bread would also have gone up in price 1000 fold, but they have not. Maybe bread has gone up 2 fold in the same time period. So really it is the bitcoin that has gained value.
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[quote name=“robUK” post=“40412” timestamp=“1386310808”]
It’s a nice way of looking at things but it is not entirely correct. Of course fiat is losing value daily, but not to the amount of 1000/1 in the time since bitcoin came into being to now. If that were the case then other commodities such as a loaf of bread would also have gone up in price 1000 fold, but they have not. Maybe bread has gone up 2 fold in the same time period. So really it is the bitcoin that has gained value.
[/quote]I don’t think that the point he was trying to make was the rate at which fiat is losing value, it is more that the system is broken and people need to take a hard look at how we all look at currency and how our economic system works.
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[quote name=“MTRisner” post=“40416” timestamp=“1386311695”]
[quote author=robUK link=topic=5472.msg40412#msg40412 date=1386310808]
It’s a nice way of looking at things but it is not entirely correct. Of course fiat is losing value daily, but not to the amount of 1000/1 in the time since bitcoin came into being to now. If that were the case then other commodities such as a loaf of bread would also have gone up in price 1000 fold, but they have not. Maybe bread has gone up 2 fold in the same time period. So really it is the bitcoin that has gained value.
[/quote]I don’t think that the point he was trying to make was the rate at which fiat is losing value, it is more that the system is broken and people need to take a hard look at how we all look at currency and how our economic system works.
[/quote]+1 sir. (rep that is)
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I think it’s way too early to peg gains and losses of crypto to gains and losses of fiat. If anything has lost value pegged to crypto it’s Gold, not the reserve currencies. I still think during this shift period from fiat to crypto investors will not see crypto as an alternative to fiat, they’ll see it as alternative to Gold as a storage of value. FTC’s price has nothing to do with the devaluation of fiat as countries desperately compete to raise exports to save their economies by offering the cheapest option. FTC’s price is pegged to BTC, which is viewed as ‘digital Gold.’
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[quote name=“Horizon” post=“40467” timestamp=“1386321277”]
I think it’s way too early to peg gains and losses of crypto to gains and losses of fiat. If anything has lost value pegged to crypto it’s Gold, not the reserve currencies. I still think during this shift period from fiat to crypto investors will not see crypto as an alternative to fiat, they’ll see it as alternative to Gold as a storage of value. FTC’s price has nothing to do with the devaluation of fiat as countries desperately compete to raise exports to save their economies by offering the cheapest option. FTC’s price is pegged to BTC, which is viewed as ‘digital Gold.’
[/quote]The comparison to gold is very interesting and the point here, more so than many might think, is an apt one: since banks and governments has begun moving away from the tangible to fueling growth with debt (obviously accumulating debt to finanace projects is ancient, but nothing like we’ve seen since the late 70s/early 80s), ‘gold’ has lost significant value.
‘Gold’, far different than the piece you can actually hold, because the piece you actually hold hasn’t been wrung through the securities department of huge banks 50+ times. Similar points can be made about many commodities; my favorite anecdote comes out of Michael Lewis’ book Boomerang, about the financial crisis. One of the more paranoid (realistic?) investors he interviewed kept physical gold bars and hundreds of thousands of dollars in physical nickels* (metal = a bit under $0.07) in a vault, largely due to his belief that buying it electronically is largely worthless. While worthless may be a strong word, I’d certainly say a case could be made that artificial ‘gold’ is being created by banks at a higher rate than BTC are being mined.
I’ll stop before getting into this: [url=http://www.zerohedge.com/news/2013-11-25/how-gold-price-manipulated-during-london-fix]http://www.zerohedge.com/news/2013-11-25/how-gold-price-manipulated-during-london-fix[/url]
*He, incidentally, was heavily questioned at multiple levels for trying to buy X amount of a specific form of currency.
